161.When bonds are sold, the gain or loss on sale is the difference between the
a.sales price and the cost of the bonds.
b.net proceeds and the cost of the bonds.
c.sales price and the market value of the bonds.
d.net proceeds and the market value of the bonds.
162.Debt investments are recorded at the
a.face value of the bonds purchased.
b.face value of the bonds purchased plus interest.
c.price paid for the bonds plus interest.
d.price paid for the bonds plus brokerage fees.
163.Under the equity method, the investor records dividends received by crediting
a.Dividend Revenue.
b.Investment Income.
c.Revenue from Share Investments.
d.Share Investments.
164.A company that acquires less than 20% ownership interest in another company should account for the share investment in that company using
a.the cost method.
b.the equity method.
c.the significant method.
d.consolidated financial statements.
165.The equity method of accounting for an investment in the ordinary shares of another company should be used by the investor when the investment
a.is composed of ordinary shares and it is the investor's intent to vote the ordinary shares.
b.ensures a source of supply of raw materials for the investor.
c.enables the investor to exercise significant influence over the investee.
d.is obtained by an exchange of shares for shares.
166.On January 2, Groneman Corporation acquired 30% of the outstanding ordinary shares of Coulson Company for $580,000. For the year ended December 31, Coulson reported net income of $90,000 and paid cash dividends of $30,000 on its shares. At December 31, the carrying value of Groneman's investment in Coulson under the equity method is
a.$571,000.
b.$580,000.
c.$607,000.
d.$598,000.
167.An unrealized loss on non-trading securities is
a.reported under Other income and expense in the income statement.
b.closed-out at the end of the accounting period.
c.reported as a separate component of equity.
d.deducted from the cost of the investment.
168.Securities bought and held primarily for sale in the near term to generate income on short-term price differences are
a.trading securities.
b.non-trading securities.
c.never-sell securities.
d.held-for-collection securities.
169.Short-term investments are
a.(1) readily marketable and (2) intended to be converted into cash after the current year or operating cycle, whichever is shorter.
b.(1) readily marketable and (2) intended to be converted into cash within the current year or operating cycle, whichever is longer.
c.(1) readily marketable and (2) intended to be converted into cash after the current year or operating cycle, whichever is longer.
d.(1) readily marketable and (2) intended to be converted into cash within the current year or operating cycle, whichever is shorter.
170.Short-term investments are securities held by a company that are
a.readily marketable.
b.intended to be converted into cash within the next year.
c.readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer.
d.readily marketable and intended to be held until maturity.